Yes, you can cancel a student loan, but don’t jump for joy just yet. You can only do this under very limited circumstances. If you are looking for a way to cancel your student loan because you have not been able to find a well-paying job, you may find your loan cancellation application promptly rejected. It’s not that easy to cancel a student loan. You must meet certain very stringent requirements and also provide irrefutable proof that you meet those specific requirements.
Understanding the circumstances under which you may be eligible to get your student loans cancelled is important. It is equally important to understand the difference between cancelling and discharging a student loan debt. Many students often use the terms interchangeably but these are two very distinct terms with completely different requirements.
When you request a student loan cancellation, you are asking the lender to cancel the portion of debt that you still owe. The lender may agree only if you meet certain conditions. If the lender agrees to cancel or write off the loan, you free yourself from all liabilities, though you may still have to pay taxes on that cancelled debt.
Below are the circumstances under which you may be able to cancel a student loan.
Cancellation Due To Disability
One of the most common reasons someone cancels their student loans is because of total disability. If a person cannot work and earn a steady income due to a disability, your creditor is more likely to write off the debt (if you provide proof).
To get your student loan cancelled due to disability, you need to send a letter from a medical expert stating that you are permanently unfit for work. You also need to provide documents proving that you receive disability-related benefits. That may be in the form of industrial injuries benefit, employment and support allowance, severe disablement allowance or disability living allowance.
Cancellation Due To Issues With The School
If you cannot complete the program you enrolled in due to issues with the school, it is possible to cancel the rest of your loan. You must keep in mind that this is not a general cancellation. You will not get your money back just because you do not like your school. Student loan cancellation is only possible under these circumstances:
- Your school closed down while you were enrolled in their program.
- You were misled about your school’s programs or the school violated certain laws.
- Your school falsely certified your eligibility in order to receive a loan.
- Your school does not return the loan funds to the lender. In this case, the amount cancelled equals the amount the school was supposed to return.
Cancellation Due To Death
All outstanding student loans get cancelled if the borrower dies before the debt is paid off in full.
A Good Loan Fit is Key
An ill-fitting loan can cause all sorts of financial woes after graduation. Instead, make sure you find a student loan that suits your specific needs and circumstances. Do plenty of research into various lenders, repayment options, and consider if you want to defer your loans or pay them off while you’re still in school.
College Raptor can help make that research easier. With our free Student Loan Finder, you can compare lenders and interest rates side by side!